Why Study International Business?

In today's economy, most economic boundaries have already disappeared and those remaining
will continue to diminish. This phenomenon is partially due to the proliferation of electronic
communication, which allows instantaneous information transfer for sales, marketing,
manufacturing and outsourcing. Furthermore, growing distribution networks, supply chains, and
transportation hubs simplify the movement of products. And, the broad networks of worldwide
financial institutions reduce currency issues. Thus, businesses operating in the Midwest can
service the needs of customers around the world.

Ultimately, most business professionals will in some way be impacted by international influences.
All individuals planning a career in business must understand the intricacies of doing business
with partners from other countries—whether the business is conducted in the United States or
outside our borders. Culture, language, political systems, geography, and socio-economic factors
all influence a person's business practices. Knowing that you need to research not only the
company you wish to do business with but, also, the culture, tradition, and business practices of
those you will be working with is vital to business success in this global marketplace.

In order to be prepared for a career in any facet of the business world (accounting, finance,
marketing, information technology, law, healthcare, etc.), knowledge and understanding of global
issues is critical. Thus, you should study international business to be prepared for diverse
business opportunities, knowing in advance that respect for and knowledge of your counterparts
can give you a competitive advantage.

Wikipedia

International business is a term used to collectively describe all commercial transactions

(private and governmental, sales, investments, logistics,and transportation) that take place
between two or more nations. Usually, private companies undertake such transactions for
profit; governments undertake them for profit and for political reasons.[1] It refers to all those
business activities which involves cross border transactions of goods, services, resources
between two or more nations. Transaction of economic resources include capital, skills,
people etc. for international production of physical goods and services such as finance,
banking, insurance, construction etc.[2]
A multinational enterprise (MNE) is a company that has a worldwide approach to markets
and production or one with operations in more than a country. An MNE is often called
multinational corporation (MNC) or transnational company (TNC). Well known MNCs
include fast food companies such as McDonald's and Yum Brands, vehicle manufacturers
such as General Motors, Ford Motor Company and Toyota, consumer electronics companies
like Samsung, LG and Sony, and energy companies such as ExxonMobil, Shell and BP. Most
of the largest corporations operate in multiple national markets.
Areas of study within this topic include differences in legal systems, political systems,
economic policy, language, accounting standards, labor standards, living standards,
environmental standards, local culture, corporate culture, foreign exchange market, tariffs,
import and export regulations, trade agreements, climate, education and many more topics.
Each of these factors requires significant changes in how individual business units operate
from one country to the next.
The conduct of international operations depends on companies' objectives and the means with
which they carry them out. The operations affect and are affected by the physical and societal
factors and the competitive environment.
Operations
• Objectives: sales expansion, resource acquisition, risk minimization
Means
• Modes: importing and exporting, tourism and transportation, licensing and
franchising, turnkey operations, management contracts, direct investment and
portfolio investments.
• Functions: marketing, global manufacturing and supply chain management,
accounting, finance, human resources
• Overlaying alternatives: choice of countries, organization and control mechanisms
Physical and societal factors
• Political policies and legal practices
• Cultural factors
• Economic forces
• Geographical influences
Competitive factors
• Major advantage in price, marketing, innovation, or other factors.
• Number and comparative capabilities of competitors
• Competitive differences by country
There has been growth in globalization in recent decades due to the following eight factors:
• Technology is expanding, especially in transportation and communications.
• Governments are removing international business restrictions.
• Institutions provide services to ease the conduct of international business.
• Consumers know about and want foreign goods and services.
• Competition has become more global.
• Political relationships have improved among some major economic powers.
• Countries cooperate more on transnational issues.
• Cross-national cooperation and agreements.
Studying international business is important because:
• Most companies are either international or compete with international companies.
• Modes of operation may differ from those used domestically.
• The best way of conducting business may differ by country.
• An understanding helps you make better career decisions.
• An understanding helps you decide what governmental policies to support.
Managers in international business must understand social science disciplines and how they
affect all functional business fields.
Tom Travis, the managing partner of Sandler, Travis & Rosenberg, PA. and international
trade and customs consultant, uses the Six Tenets when giving advice on how to globalize
one's business. The Six Tenets are as follows[3]:
1. Take advantage of trade agreements: think outside the border
○ Familiarize yourself with preference programs and trade agreements.
○ Read the fine print.
○ Participate in the process.
○ Seize opportunities when they arise.
2. Protect your brand at all costs
○ You and your brand are inseparable.
○ You must be vigilant in protecting your intellectual property both at home and
abroad.
○ You must be vigilant in enforcing your IP rights.
○ Protect your worldwide reputation by strict adherence to labor and human
rights standards.
3. Maintain high ethical standards
○ Strong ethics translate into good business.
○ Forge ethical strategic partnerships.
○ Understand corporate accountability laws.
○ Become involved with the international business self-regulation movement.
○ Develop compliance protocols for import and export operations.
○ Memorialize your company's code of ethics and compliance practices in
writing.
○ Appoint a leader.
4. Stay secure in an insecure world
○ Security requires transparency throughout the supply chain.
○ Participate in trade-government partnerships.
○ Make the most of new security measures.
○ Secure your data.
○ Keep your personnel secure.
5. Expect the Unexpected
○ The unexpected will happen.
○ Do your research now.
○ Address your particular circumstances.
6. All global business is personal
○ Go to the source.
○ Keep communications open.
○ Keep the home office operational.
 ○ Fly the flag at your overseas locations.
○ Relate to offshore associates on a personal level.
○ Be available to overseas clients and customers 24/7.

According to C.K. Prahalad & S. Hart,2002, The fortune at the bottom of the pyramid,
Strategy & Business, 26: 54-67, and (2) S.Hart, 2005, Capitalism at the Crossroads (p. 111),
Philadelphia: Wharton School Publishing.
Top Tier: Per capita GDP/GNI > $20,000 Approximately one billion people
Second Tier: Per capita GDP/GNI $2,000-$20,000 Approximately one billion people
Base of the Pyramid Per capita GDP/GNI < $2,000 Approximately four billion people

Modes of ib
The oldest mode of international business is foreign trade. A firm imports its necessary inputs from the
cheapest source, while its exports its output to different countries in order to earn maximum amount of
foreign exchange. In this case, no overseas manufacturing is involved

The other mode of international business is licensing. When a firm lacks capital
and detailed knowledge about a foreign market, it allows its technology, patent,
trade mark and other proprietary advantages to be used for a fee by a licensee
or technology importing firm. As compared to export, this mode requires less
time or depth of involvement in foreign markets. This method is also used when
the host government put restrictions on the inflow of foreign capital investment.

The third mode is known as management contracting. In this mode, the company
sells abroad a particular resource, like management skills. The contract is meant
for a given number of years during which the seller of management skills
manages the affaires of the company located in the host country for a specific
fee.

Joint ventures are the fourth mode. They represent a partnership agreement in
which the venture is owned jointly by the international company and a company
of the host country. Naturally, the joint venture allows the two firms to apply
their respective comparative advantages in a given project. For example
technology and marketing ability of German firms and raw material availability of
Australia firms have led to joint-venture agreements between the two countries.

An international company may acquire existing operations in a foreign country in

order to penetrate the foreign market. The greatest benefit of this mode is that
the acquiring company does not have to begin operations from scratch, and so
does not have to labor hard to grab the market. The quantum of investment,
however, in this case is quite large.

Cont.........
Finally, an international company invests in the majority equity shares of the company of the host
country. This way, the company in the host country becomes a subsidiary of the international
company. This mode is

better than the acquisition inasmuch as the operations can be tailored exactly to the firm's need and
what is more, the size of the investment is often lower than in case of acquisition. However, the
benefits begin to appear only when the consumer base is firmly established. The importer of goods
has normally to pay for the import in convertible currencies which they buy with their own currency.
Some time money is not the only way to do the business, in other words in exchange of useful good
or raw materials the exchange is done.

When a company innovates a specific technology and its product is mature in the markets abroad or
when the company wants to reap the location advantage in foreign country, it sets up an affiliate
there. Whatever the motivation behind foreign investment or foreign manufacturing, the company
evaluates the cash inflow and outflow during his life of the project and makes investments only
account foreign exchange risk and the political risk involved.

IIND as per 2008

The six major modes of international business are imports and exports, tourism and transportation,
licensing and franchising, turnkey operations, management contracts, and direct and portfolio
investment.

Imports and exports are the most common mode of international business, particularly in smaller
companies even though they are less likely to export. Large companies are more likely to engage in
other modes of

international business in conjunction with importing and exporting. Companies may import and export
merchandise, defined as tangible goods brought into or out of (respectively) a country. While exports
and imports apply mainly to goods, they can also apply to services, or nonproducts.

Most service imports and exports revolve around tourism and transportation. The revenue gained
from international tourism and transportation is best seen in hotels, airlines, travel agencies, and
shipping companies. For many countries, especially in the Caribbean and Southeast Asia, their
income on foreign tourism is more important than their income from exports. The same holds true in
countries such as Norway and Greece, who earn a considerable amount from foreign shipping.

Many companies enter into international licensing agreements, allowing other countries around the
world to use their assets (ie: trademarks, patents, copyrights, or expertise) under contract, receiving
royalty payments in return. Similarly, many companies engage in franchising, a mode of business
where the franchisor allows the franchisee to use a trademark that is an essential part of the
franchisee's business. For example, Gloria Vanderbilt has franchised her name out to several clothing
companies, forming the Gloria Vanderbilt line. The franchisor also assists on a continuing basis in the
operation of the business-for example, by providing components, management services, and
technology.

Companies also pay fees that may be incurred on an international level for engineering services
handled through turnkey operations and management contracts. A turnkey operation involves
construction of facilities,

performed under contract, which is then transferred to the owner when the company is ready to begin
operating. Management contracts are initiated when one company supplies personnel to perform
general or specialized management functions for another company. This is most evident in Disney's
theme parks in France, Japan, and China.

Finally, international business occurs within direct and portfolio investments. By investing in a foreign
company, the investor takes ownership in a foreign property for a financial return. A foreign direct
investment (the more common of the two) gives the investor a controlling interest in the foreign
company. When two or more companies share in an FDI, it is known as a joint venture. When a
government joins a company in an FDI, it becomes a mixed venture. Conversely, a portfolio
investment is a noncontrolling interest in a company that usually involves either taking stock in a
company or making loans to a company in the form of bonds, bills, or notes that the investor
purchases. Portfolio investments are particularly popular with multinational enterprises as they offer a
safe means towards short-term financial gain.
Modes of Entry into International
Markets (Place)
How does an organization enter an overseas market?
Background
A mode of entry into an international market is the channel which your organization employs
to gain entry to a new international market. This lesson considers a number of key
alternatives, but recognizes that alteratives are many and diverse. Here you will be consider
modes of entry into international markets such as the Internet, Exporting, Licensing,
International Agents, International Distributors, Strategic Alliances, Joint Ventures,
Overseas Manufacture and International Sales Subsidiaries. Finally we consider the Stages
of Internationalization.
It is worth noting that not all authorities on international marketing agree as to which mode of
entry sits where. For example, some see franchising as a stand alone mode, whilst others see
franchising as part of licensing. In reality, the most important point is that you consider all
useful modes of entry into international markets - over and above which pigeon-hole it fits
into. If in doubt, always clarify your tutor's preferred view.

The Internet
The Internet is a new channel for some organizations and the sole channel for a large number
of innovative new organizations. The eMarketing space consists of new Internet companies
that have emerged as the Internet has developed, as well as those pre-existing companies that
now employ eMarketing approaches as part of their overall marketing plan. For some
companies the Internet is an additional channel that enhances or replaces their traditional
channel(s). For others the Internet has provided the opportunity for a new online company.
More

Exporting
There are direct and indirect approaches to exporting to other nations. Direct exporting is
straightforward. Essentially the organization makes a commitment to market overseas on its
own behalf. This gives it greater control over its brand and operations overseas, over an
above indirect exporting. On the other hand, if you were to employ a home country agency
(i.e. an exporting company from your country - which handles exporting on your behalf) to
get your product into an overseas market then you would be exporting indirectly. Examples
of indirect exporting include:
• Piggybacking whereby your new product uses the existing distribution and
logistics of another business.
• Export Management Houses (EMHs) that act as a bolt on export
department for your company. They offer a whole range of bespoke or a la
carte services to exporting organizations.
 • Consortia are groups of small or medium-sized organizations that group
together to market related, or sometimes unrelated products in
international markets.
• Trading companies were started when some nations decided that they
wished to have overseas colonies. They date back to an imperialist past
that some nations might prefer to forget e.g. the British, French, Spanish
and Portuguese colonies. Today they exist as mainstream businesses that
use traditional business relationships as part of their competitive
advantage.

Licensing
Licensing includes franchising, Turnkey contracts and contract manufacturing.
• Licensing is where your own organization charges a fee and/or royalty for
the use of its technology, brand and/or expertise.
• Franchising involves the organization (franchiser) providing branding,
concepts, expertise, and infact most facets that are needed to operate in
an overseas market, to the franchisee. Management tends to be controlled
by the franchiser. Examples include Dominos Pizza, Coffee Republic and
McDonald's Restaurants.
• Turnkey contracts are major strategies to build large plants. They often
include a the training and development of key employees where skills are
sparse - for example, Toyota's car plant in Adapazari, Turkey. You would
not own the plant once it is handed over.

International Agents and International Distributors

Agents are often an early step into international marketing. Put simply, agents are individuals
or organizations that are contracted to your business, and market on your behalf in a
particular country. They rarely take ownership of products, and more commonly take a
commission on goods sold. Agents usually represent more than one organization. Agents are
a low-cost, but low-control option. If you intend to globalize, make sure that your contract
allows you to regain direct control of product. Of course you need to set targets since you
never know the level of commitment of your agent. Agents might also represent your
competitors - so beware conflicts of interest. They tend to be expensive to recruit, retain and
train. Distributors are similar to agents, with the main difference that distributors take
ownership of the goods. Therefore they have an incentive to market products and to make a
profit from them. Otherwise pros and cons are similar to those of international agents.

Strategic Alliances (SA)

Strategic alliances is a term that describes a whole series of different relationships between
companies that market internationally. Sometimes the relationships are between competitors.
There are many examples including:
• Shared manufacturing e.g. Toyota Ayago is also marketed as a Citroen
and a Peugeot.
• Research and Development (R&D) arrangements.
• Distribution alliances e.g. iPhone was initially marketed by O2 in the
United Kingdom.
• Marketing agreements.
Essentially, Strategic Alliances are non-equity based agreements i.e. companies remain
independent and separate.

Joint Ventures (JV)

Joint Ventures tend to be equity-based i.e. a new company is set up with parties owning a
proportion of the new business. There are many reasons why companies set up Joint Ventures
to assist them to enter a new international market:
• Access to technology, core competences or management skills. For
example, Honda's relationship with Rover in the 1980's.
• To gain entry to a foreign market. For example, any business wishing to
enter China needs to source local Chinese partners.
• Access to distribution channels, manufacturing and R&D are most
common forms of Joint Venture.

Overseas Manufacture or International Sales Subsidiary

A business may decide that none of the other options are as viable as actually owning an
overseas manufacturing plant i.e. the organization invests in plant, machinery and labor in
the overseas market. This is also known as Foreign Direct Investment (FDI). This can be a
new-build, or the company might acquire a current business that has suitable plant etc. Of
course you could assemble products in the new plant, and simply export components from the
home market (or another country). The key benefit is that your business becomes localized -
you manufacture for customers in the market in which you are trading. You also will gain
local market knowledge and be able to adapt products and services to the needs of local
consumers. The downside is that you take on the risk associated with the local domestic
market. An International Sales Subsidiary would be similar, reducing the element of risk, and
have the same key benefit of course. However, it acts more like a distributor that is owned by
your own company.

Internationalization Stages
So having considered the key modes of entry into international markets, we conclude by
considering the Stages of Internationalization. Some companies will never trade overseas and
so do not go through a single stage. Others will start at a later or even final stage. Of course
some will go through each stage as summarized now:
• Indirect exporting or licensing
• Direct exporting via a local distributor
• Your own foreign presences
• Home manufacture, and foreign assembly
• Foreign manufacture
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Modes of entry into an International Business:-

There are some basic decisions that the firm must take befor forien expansion like: which

markets to enter, when to enter those markets, and on what scale.

Which foreign markets?

-The choice based on nation’s long run profit potential.

-Look in detail at economic and political factors which influence foreign markets.

-Long run benefits of doing business in a country depends on following factors:

- Size of market (in terms of demographics)
- The present wealth of consumer markets (purchasing power)
- Nature of competition
By considering such factors firm can rank countries in terms of their attractiveness and

long-run profit.

Timing of entry:-

It is important to consider the timing of entry.

Entry is early when an international business enters a foreign market before other foreign
firms. And late when it enters after other international businesses.
The advantage is when firms enters early in the foreign market commonly known as first-
mover advantages
First mover advantage;-

1. it’s the ability to prevent rivals and capture demand by establishing a strong brand
name.
2. Ability to build sales volume in that country.so that they can drive them out of market.
3. Ability to create customer relationship.
Disadvantage:
1.firm has to devote effort, time and expense to learning the rules of the country.
2.risk is high for business failure(probability increases if business enters a national
market after several other firms they can learn from other early firms mistakes)
Modes of entry:--
1. Exporting
2. Licensing
3. Franchising
4. Turnkey Project
5. Mergers & Acquisitions:
6. Joint Venture
7. Acquisitions & Mergers
8. Wholly Owned Subsidiary
1.Exporting:

It means the sale abroad of an item produced ,stored or processed in the

supplying firm’s home country. It is a convenient method to increase the
sales. Passive exporting occurs when a firm receives canvassed
them. Active exporting conversely results from a strategic decision to
establish proper systems for organizing the export fuctions and for
procuring foreign sales.

Advantages Of Exporting:

a. Need for limited finance;

If the company selects a company in the host country to distribute the
company can enter international market with no or less financial
resources but this amount would be quite less compared to that would
be necessary under other modes.
b. Less Risks;
Exporting involves less risk as the company understand the culture ,
customer and the market of the host country gradually. Later after
understanding the host country the company can enter on a full scale.
c. Motivation for exporting:
Motivation for exporting are proactive and reactive. Proactive
motivations are opportunities available in the host country. Reactive
motivators are those efforts taken by the company to export the
product to a foreign country due to the decline in demand for its
product in the home country.

2.Licensing :
In this mode of entry ,the domestic manufacturer leases the right to use
its intellectual property (ie) technology , copy rights ,brand name etc to
a manufacturer in a foreign country for a fee. Here the manufacturer in the
domestic country is called licensor and the manufacturer in the foreign is
called licensee. The cost of entering market through this mode is less
costly. The domestic company can choose any international location and
enjoy the advantages without incurring any obligations and responsibilities
of ownership ,managerial ,investment etc.

Advantages;
1. Low investment on the part of licensor.
2. Low financial risk to the licensor
3. Licensor can investigate the foreign market without much efforts on
his part.
4. Licensee gets the benefits with less investment on research and
development
5. Licensee escapes himself from the risk of product failure.

Disadvantages:

1. It reduces market opportunities for both

2. Both parties have to maintain the product quality and promote the
product . Therefore one party can affect the other through their
improper acts.
3. Chance for misunderstanding between the parties.
4. Chance for leakages of the trade secrets of the licensor.
5. Licensee may develop his reputation
6. Licensee may sell the product outside the agreed territory and after the
expiry of the contract.

3.Franchising

Under franchising an independent organization called the franchisee

operates the business under the name of another company called the
franchisor under this agreement the franchisee pays a fee to the franchisor.
The franchisor provides the following services to the franchisee.
1. Trade marks
2. Operating System
3. Product reoutation
4. Continuous support system like advertising , employee training ,
reservation services quality assurances program etc.

Advantages:

1. Low investment and low risk

2. Franchisor can get the information regarding the market culture,
customs and environment of the host country.
3. Franchisor learns more from the experience of the franchisees.
4. Franchisee get the benefits of R& D with low cost.
5. Franchisee escapes from the risk of product failure.

Disadvantages:

1. It may be more complicating than domestic franchising.

2. It is difficult to control the international franchisee.
3. It reduce the market opportunities for both
4. Both the parties have the responsibilities to maintain product quality
and product promotion.
5. There is a problem of leakage of trade secrets.

4.Turnkey Project:

A turnkey project is a contract under which a firm agrees to fully

design , construct and equip a manufacturing/ business/services facility
and turn the project over to the purchase when it is ready for operation for
a remuneration like a fixed price , payment on cost plus basis. This form
of pricing allows the company to shift the risk of inflation enhanced costs
to the purchaser. Eg nuclear power plants , airports,oil refinery , national
highways , railway line etc. Hence they are multiyear project.

5.Mergers & Acquistions:

A domestic company selects a foreign company and merger itself with

foreign company in order to enter international business. Alternatively the
domestic company may purchase the foreign company and acquires it
ownership and control. It provides immediate access to international
manufacturing facilities and marketing network.

Advantages:

1. The company immediately gets the ownership and control over the
acquired firm’s factories, employee, technology ,brand name and
distribution networks.
2. The company can formulate international strategy and generate more
revenues.
3. If the industry already reached the stage of optimum capacity level or
overcapacity level in the host country. This strategy helps the host
country.

Disadvantages:

1. Acquiring a firm in a foreign country is a complex task involving

bankers, lawyers regulation, mergers and acquisition specialists from
the two countries.
2. This strategy adds no capacity to the industry.
3. Sometimes host countries imposed restrictions on acquisition of local
companies by the foreign companies.
4. Labour problem of the host country’s companies are also transferred to
the acquired company.
6.Joint Venture

Two or more firm join together to create a new business entity that is
legally separate and distinct from its parents. It involves shared ownership.
Various environmental factors like social , technological economic and
political encourage the formation of joint ventures. It provides strength in
terms of required capital. Latest technology required human talent etc. and
enable the companies to share the risk in the foreign markets. This act
improves the local image in the host country and also satisfies the
governmental joint venture.

Advantages:

1. Joint venture provide large capital funds suitable for major projects.
2. It spread the risk between or among partners.
3. It provide skills like technical skills, technology, human skills ,
expertise , marketing skills.
4. It make large projects and turn key projects feasible and possible.
5. It synergy due to combined efforts of varied parties.

Disadvantages:

1. Conflict may arise

2. Partner delay the decision making once the dispute arises. Then the
operations become unresponsive and inefficient.
3. Life cycle of a joint venture is hindered by many causes of collapse.
4. Scope for collapse of a joint venture is more due to entry of
competitors changes in the partners strength.
5. The decision making is slowed down in joint ventures due to the
involvement of a number of parties.
7.Acquisitions & Mergers:

A mergers is a voluntary and permanent combination of business

whereby one or more firms integrate their operations and identities

with those of another and henceforth work under a common name and

in the interests of the newly formed amalgamations.

Motives for acquisitions:

1. Removal of competitor
2. Reduction of the Co failure through spreading risk over a wider
range of activities.
3. The desire to acquire business already trading in certain
markets & possessing certain specialist employees &
equipments.
4. Obtaining patents, license & intellectual property.
5. Economies of scale possibly made through more extensive
operations.
6. Acquisition of land, building & other fixed asset that can be
profitably sold off.
7. The ability to control supplies of raw materials.
8. Expert use of resources.
9. Tax consideration.
10. Desire to become involved with new technologies &
management method particularly in high risk industries.

8.Wholly Owned Subsidiary

Subsidiary means individual body under parent body. This Subsidiary or
individual body as per their own generates revenue. They give their own
rent, salary to employees, etc. But policies and trademark will be
implemented from the Parent body. There are no branches here. Only the
certain percentage of the profit will be given to the parent body.
A subsidiary, in business matters, is an entity that is controlled by a bigger

and more powerful entity. The controlled entity is called a company,

corporation, or limited liability company, and the controlling entity is called

its parent (or the parent company). The reason for this distinction is that a
lone company cannot be a subsidiary of any organization; only an entity
representing a legal fiction as a separate entity can be a subsidiary. While
individuals have the capacity to act on their own initiative, a business entity
can only act through its directors, officers and employees.
The most common way that control of a subsidiary is achieved is through
the ownership ofshar es in the subsidiary by the parent. These shares give
the parent the necessary votes to determine the composition of the board of
the subsidiary and so exercise control. This gives rise to the common

presumption that 50% plus one share is enough to create a subsidiary. There
are, however, other ways that control can come about and the exact rules
both as to what control is needed and how it is achieved can be complex (see
below). A subsidiary may itself have subsidiaries, and these, in turn, may
have subsidiaries of their own. A parent and all its subsidiaries together are
called a group, although this term can also apply to cooperating companies
and their subsidiaries with varying degrees of shared ownership.
Subsidiaries are separate, distinctlegal entities for the purposes oftaxation
andr egulation. For this reason, they differ fromdivisions, which are
businesses fully integrated within the main company, and not legally or
otherwise distinct from it.
Subsidiaries are a common feature of business life and most if not all major

businesses organize their operations in this way. Examples includeholding

companies such as Berkshire Hathaway, Time Warner, or Citigroup as well

as more focused companies such asI BM, or Xerox Corporation. These, and
others, organize their businesses into national or functional subsidiaries,
sometimes with multiple levels of subsidiaries.